Question

Project Droid has a net present value of $45,000 and has an initial investment of $180,000. Project Clone has a net present value of $8,000 and has an initial investment of $30,000. The projects are proposals for increasing revenue and are mutually exclusive. The firm should accept... Only Project Clone should be accepted Only Project Droid should be accepted Neither Project should be accepted Both Project Clone and Project Droid should be accepted

Answer 1

Answer:

Neither Project should be accepted

Explanation:

Given that

The net present value and the initial investment of the project droid is $45,000 and $180,000 respectively

And, the net present value and the initial investment of the project clone is $8,000 and $30,000 respectively

Since the net present value of both the projects are less than their initial investment so both the projects should not be accepted as the net present value is in negative